Company liquidation – What you need to know

If you’re a small business owner facing the liquidation of your company, you’ll probably have lots of questions about what to expect while going through the process, such as how do you know if you’re making the right decisions and what you can do to make things easier on yourself?

Whether your company liquidation is happening voluntarily, through a procedure known as a Creditors’ Voluntary Liquidation (or CVL), or involuntarily, through a compulsory liquidation, this is something that will be difficult to manage yourself and you should consider enlisting the support of a specialist offering liquidation services to help you navigate the process. Once it’s decided that liquidation is indeed your best option, here’s what you can expect.

Appointment of the official receiver

During the liquidation process, your company
assets will be sold in an effort to raise money to pay off as much of your
company debt as possible.

This will involve selling all of the
business’s property, assets, and holdings. The whole process will be overseen
by an official insolvency practitioner, otherwise known as the official
receiver.

It is the receiver’s job to ensure that proper
procedures are followed, with the end result being the complete closure of the
company. After this point, your company will cease to exist.

Disposal of your company assets

The process of liquidating your business
assets seeks to turn these assets into cash in order to pay off as many of your
business’s creditors as possible.

Your business assets include such items as office IT equipment, furniture, tools and any other equipment that your company owns outright. The money raised from the sale of these items will then be used to reduce or completely pay off any outstanding company debts.

In some cases, the liquidation of these assets
may provide enough money to not only pay off your creditors but also leave you
with a surplus of cash once all the debts are settled.

What business assets will be liquidated?

To make sure your company recoups as much
money as possible from liquidating its assets, an audit will be undertaken of
all the physical property that your business owns.

These assets will include:

• Computers and other IT equipment

• Business phones, including landline phones and business mobile phones

Potential refunds

To try and secure as much cash as possible for
the settlement of outstanding debts, you should also check to see if you can
claim back money on such things as business insurance policies, unpaid invoices
owed, prepaid equipment leases and any security deposits that can be paid back
to your company.

Company director redundancy

One of the most hard-hitting aspects of going
through a company liquidation is the fact that you, as the company director,
will be facing redundancy.

No matter whether the liquidation of your
company is voluntary or forced, there is little doubt that the process can take
a hefty toll on your stress levels and emotional well-being – the loss of your
business not only impacts you emotionally, seeing the company you built close
down, but it also means that you will be out of a job.

Your eligibility for this, and the amount of
money you get from your redundancy payout, will depend on a variety of factors
such as your length of service as a director, your age and the salary you were
paid from your company.

It’s a good idea to discuss this option with
your insolvency practitioner. They will be able to work out whether you can
make a redundancy claim and help you with the claims process.

Getting professional help

As already highlighted, it can be incredibly
difficult, not to mention stressful, to deal with the pressure of liquidating
your company on your own. It is almost always a better idea to get help from a
highly qualified and experienced liquidation professional to manage the process
and provide the best advice.

When it’s become obvious that liquidating your
company is the only sensible course of action to take, you need to act as
quickly as possible in order to minimise any further debts being run up by the
company, or the uncontrollable increase of the existing debts already owed to
your creditors.

As difficult as this whole process can be,
there is some reassurance from having an experienced professional manage
everything for you – eliminating any worry about what needs to be done and
making sure that, despite the trying circumstances, the best possible outcome
will be achieved.

So, if you’re facing significant financial
difficulties that are making it difficult for your business to continue and
you’re unsure of what to do next, it’s important that you get advice from an
experienced professional as soon as possible – with their help, you may even
discover that it is, in fact, possible to save your business.